LLC Formation Timing

[Wiley Strahan]

I am looking to buy a commercial property (20+ unit apartment building)within the next 3 months or so and want to protect myself using an LLC. My question is on the timing of when to create the LLC.

1) When do you normally create the LLC?

- Should I do it now, knowing that the process could take some time and we could always just sit on it for the next few months

-OR Wait until the property is in the process of being purchased?

[Scott Skinger]

Typical is to have the building under contract and past physical DD, just to avoid the cost/time of setting up the LLC and operating agreement.

Two thoughts on timing. One, actual formation or setting up a LLC (paperwork) is quick, can happen within 24 hours. Two, the planning around it can take a little time and something to add to your checklist of things to do. Everybody's situation/goals are different, so have a brief conversation with an attorney to make sure that your needs are addressed.

A third thought, "now", as you described your situation above, is too early. You don't need to think about the LLC until you have a LOI accepted on a building and your negotiating terms of the PSA. It is a checklist item, not something to strategize around.